4 Simple Steps to Buying I Bonds

Purchasing I bonds is a snap.

These days, buying stocks in my brokerage account is really second nature to me. I simply sign on, choose the company I want to invest in along with the quantity of shares I'm looking to buy (or the amount of money I want to invest), and there you go -- I've acquired more stock.

Recently, I made the decision to invest in I bonds. If you're not familiar with them, they're government-backed securities whose interest rate is pegged to the rate of inflation.

Normally, when you buy bonds, you get a fixed interest rate on your money. The interest rate you get on your I bonds varies depending on inflation rates.

Meanwhile, right now, inflation is soaring. And that makes I bonds a good bet. In fact, many financial experts are urging people to buy I bonds since they're currently paying so generously.

Now, the one drawback of buying I bonds is that you can't simply log into your brokerage account and purchase them. There's a bit more to the process. But thankfully, it's a simple one. Here's how to go about buying I bonds.

1. Decide how much you want to invest

The maximum amount of money you can put into I bonds each year is $10,000. But you can also invest as little as $25 in I bonds. Take a look at your finances and decide what dollar amount is right for you. Do keep in mind that you're required to hold I bonds for at least a year after purchasing them. So whatever money you put in won't be available to you for a minimum of 12 months.

2. Create a Treasury Direct account

Rather than use your brokerage account to buy I bonds, you'll purchase them directly from the U.S. Treasury Department. Simply create an account on treasurydirect.gov and follow the instructions.

3. Link your account to an existing bank account

To purchase I bonds, you'll need to link your Treasury Direct account to an existing checking or savings account. Make sure to carefully copy over your bank account number and routing number so the transaction can go through.

4. Transfer your funds over, and you're done

Once your accounts are linked, all you need to do is authorize the transfer of funds, and you're all set. You'll get a confirmation showing the amount of I bonds you've purchased. Hang onto that information so you know what you own, and also, so you can begin that 12-month countdown of having to hold onto your I bonds.

A hassle-free process

Investing in I bonds really isn't difficult at all, and at a time when inflation is soaring, it pays to use that to your advantage.

One thing to keep in mind is that I bonds aren't the only type of security you can purchase with your Treasury Direct account. There may be other government-backed securities you're interested in, so it could pay to do some reading and see which investment choices make sense for you.